The Greatest Story Teller in Venture Capital

VC Evolution

The venture capital landscape has undergone significant transformations, particularly with the rise of growth funds and crossover funds. Sebastian Mallaby highlights how firms like Sequoia have adapted by creating substantial growth funds to maintain control and governance over their investments. This shift was partly a response to experiences like Sequoia's with Yahoo, where late-stage investors like Masayoshi Son exerted influence without contributing to governance 1.

Son comes along, he visits Yahoo in 1996. He says, very good to meet you. Remind me who your competitors are. And then he says, yeah, I'd like to give invest 100 million in your company.

--- Sebastian Mallaby

Additionally, the geographical shift in venture capital, accelerated by the pandemic, has seen innovation centers emerge beyond Silicon Valley, reflecting a global expansion of the tech ecosystem 2.

   

Governance Issues

Governance in rapidly growing companies presents unique challenges, especially with the influx of late-stage capital. Sebastian Mallaby discusses how traditional governance models are disrupted when late-stage investors, who often do not join boards, provide capital without oversight 3. This can lead to a lack of accountability, as seen in cases like Uber and WeWork, where early-stage investors were sidelined.

The early stage investor, in this case, Bill Gurley of benchmark, was just being ignored because the later stage investors didn't care.

--- Sebastian Mallaby

Furthermore, the dynamics between founders and venture capitalists are crucial, with successful founders often balancing control with humility and openness to advice 4.